Hess Corp. has confirmed its 2015 capital and exploratory budget will be US $4.7 billion, a cut of 16% from its 2014 actual spend of $5.6 billion, but with its deepwater and general offshore activity to remain relatively robust.
Of its total spend, $1.2 billion (26%) will go on production, $1 billion (21%) on developments and $0.4 billion (8%) for exploration, while the lion’s share of $2.1 billion (45%) is budgeted for unconventional shale resources.
Specifically on the offshore side of things, Greg Hill, President and COO, said the 2015 budget includes “continued offshore production drilling at the Tubular Bells and Shenzi fields in the deepwater Gulf of Mexico, at the South Arne field in Denmark, the Valhall field in Norway, the Okume Complex in Equatorial Guinea, and also in the Joint Development Area of the Gulf of Thailand”.
He added that the budget will also fund the continued full development of the North Malay Basin project in Malaysia, and the development of the Stampede field in the deepwater GoM. “Our 2015 exploration drilling program includes wells in the deepwater GoM, offshore Guyana and Kurdistan,” he continued.
Breaking down the offshore production sector in more detail, Hess will specifically spend $300 million drilling four production wells and one water injection well on South Arne (Hess 62%, operator), and to bring three production wells online and drill one new well on Valhall (Hess 64%, BP operator).
A further $250 million will be spent to complete drilling of one production well and one water injection well, and for continued facilities work at Tubular Bells (Hess 57.1%, operator) in the GoM, and $220 million to drill two production wells (Hess 85%, operator) off West Africa’s Equatorial Guinea.
Another $200 million will go on completing drilling of production, appraisal and water injection wells at Shenzi (Hess 28%, BHP operator) and for small-scale well-related activity elsewhere in the deepwater GoM. In the Gulf of Thailand, $175 million will go on drilling 8-10 wells and progressing the ongoing Booster Compression project in the Joint Development Area (Hess 50%).
In the offshore development segment, Hess said $300 million will go on progressing hull and topsides fabrication, and starting drilling on Stampede (Hess 25%, operator) in the deepwater GoM, with another $600 million to be spent on installing three wellhead platform jackets, progressing fabrication and starting Phase 1 drilling for the North Malay Basin full field development project (Hess 50%, operator) in Malaysia.
The exploration segment, making up $400 million in total, will see Hess participate in the deepwater GoM wildcat Sicily (Hess 25%, Chevron operator), the Liza well (Hess 30%, Esso E&P Guyana Ltd. operator) offshore Guyana, and the completion of drilling operations in the Dinarta block (Hess 80%, operator) onshore Kurdistan.
Hess’ fourth quarter 2014 adjusted net income was $53 million, compared to $319 million in Q4 2013. This was despite oil and gas production rising to 362,000 boe/d compared to 307,000 boe/d in Q4 2013. The company expects production, excluding Libya, to average between 350,000-360,000 boe/d this year, an increase of 10-13% from pro forma production of 318,000 boe/d in 2014.